David Keogh v French Par-Bake
[2018] FWC 7742
•20 DECEMBER 2018
| [2018] FWC 7742 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
David Keogh
v
French Par-Bake
(U2016/11839)
COMMISSIONER CRIBB | MELBOURNE, 20 DECEMBER 2018 |
Application for relief from unfair dismissal – application for costs – costs not ordered.
[1] This an application by Mr David Keogh (the Costs Applicant) for an order for costs under section 611 of the Fair Work Act 2009 (the Act). The application concerns Mr Keogh’s application for an unfair dismissal remedy (UD application) in relation to his dismissal by French Par-Bake (the Costs Respondent, the company, French Par-Bake) under section 394 of the Act.
Background
[2] On 23 September 2016 Mr Keogh filed an unfair dismissal application, alleging that his dismissal by French Par-Bake was harsh, unjust and unreasonable.
[3] The company made a jurisdictional objection on 29 September 2016 on the grounds that there was no termination at the initiative of the employer. The jurisdictional objection was heard, together with the merits of the substantive application, on 20 January 2017.
[4] A written decision 1, dated 26 May 2017, was issued in relation to the jurisdictional objection and the merits of the application. The company’s jurisdictional objection was dismissed and the dismissal was found to have been unfair. A subsequent decision2 in relation to remedy was issued on 15 September 2017. The company was ordered to pay compensation of $4500 (gross) to Mr Keogh.
[5] Mr Keogh filed an application for costs on 2 October 2017, under section 611 of the Act, on the grounds that:
• The company did not have reasonable cause to mount the jurisdictional objection.
• Mr Keogh made a Calderbank offer on 20 January 2017.
[6] Mr Keogh’s application for costs was heard on 7 September 2018. Mr Keogh was represented by Mr M White, of Counsel whilst French Par-Bake was represented by Mr G Christodoulou, solicitor.
Legislative framework
[7] In relation to this matter, section 611 of the Act set out the grounds on which the Fair Work Commission (Commission) may exercise its discretion and award payment of a party’s costs.
[8] Section 611 is as follows:
“611 Costs
(1) A person must bear the person’s own costs in relation to a matter before the FWC.
(2) However, the FWC may order a person (the first person) to bear some or all of the costs of another person in relation to an application to the FWC if:
(a) the FWC is satisfied that the first person made the application, or the first person responded to the application, vexatiously or without reasonable cause; or
(b) the FWC is satisfied that it should have been reasonably apparent to the first person that the first person’s application, or the first person’s response to the application, had no reasonable prospect of success.
Note: The FWC can also order costs under sections 376, 400A, 401 and 780.
(3) A person to whom an order for costs applies must not contravene a term of the order.
Note: This subsection is a civil remedy provision (see Part 4 1).”
Submissions
Was the application made without reasonable cause? (section 611(2)(a))
Mr Keogh
[9] It was submitted that the Costs Respondent did not have reasonable cause to mount the jurisdictional objection. This was because, on the evidence of the company, the company was not aware of the Small Business Fair Dismissal Code (the Code) nor the requirement to be compliant in dismissing the Costs Applicant. 3 The Costs Applicant submitted that this meant that the decision was almost able to proceed summarily with respect to section 387 of the Act once the jurisdictional objection was dealt with. This was on the basis that, where an employer is unable to demonstrate compliance with the relevant Code, this would result, with respect to section 611, in the Costs Respondent not having reasonable cause for maintaining that the dismissal was fair.4
Calderbank offer
[10] With respect to the Costs Applicant’s Calderbank offer, it was stated that it was a genuine offer for settlement. It was argued that, when compared with the ultimate award and the costs incurred by the Costs Applicant during the hearing that followed, the Calderbank offer militated in favour of an award of costs for the Costs Applicant as the Costs Respondent continued with its jurisdictional objection without reasonable cause. 5
[11] It was acknowledged that the Calderbank offer was set out at a higher amount than the Commission awarded. 6 This was due to the extent to which Mr Keogh had mitigated his loss which led to a lower amount awarded. It was contended that this should not be held against the Costs Applicant.7 The Calderbank offer was described as having clearly set out what the position was in relation to the contract; the move and the non-consent to the transfer of positions. It was argued that the offer reflected what was ultimately determined by the Commission.8 The Costs Applicant contended that the Calderbank offer had put the Costs Respondent squarely on notice about what the actual dispute was about so there could not have been a lack of clarity at the hearing.9
Adversarial attitude of the Costs Respondent
[12] Secondly, it was submitted that the Costs Respondent had taken an overly adversarial approach where absolutely every point was taken during the hearing. This was said to have been in a situation where the merits of the dismissal were going to be untenable if the jurisdictional objection failed. 10 The Costs Applicant argued that the Costs Respondent had made the mutually exclusive submission that there was no dismissal but, if we’re wrong about that, then the dismissal was unfair. It was asserted that the Costs Respondent could have conceded that, if the jurisdictional objection failed, then there was nothing further to argue about the merits.11
[13] A further example of the Costs Respondent’s hyper adversarial attitude was said to be that, following the costs application, the Costs Respondent had written to the Commission alleging unsubstantiated apprehended bias and that the Commissioner recuse herself from the costs hearing. 12
[14] In addition, it was stated by Mr White that he had marked his brief for the costs hearing pro bono. This was because there was now a lack of proportionality in relation to the amount awarded by the Commission and the Costs Applicant’s costs. Mr White contended that elements of the disproportionality had been caused by the Costs Respondent’s attitude to Mr Keogh’s application. 13
[15] It was explained on behalf of the Costs Applicant that the Costs Respondent was so adversarial in the face of reasonableness that it resulted in the Costs Respondent acting unreasonably in relation to section 611. 14
[16] In order to illustrate the Costs Applicant’s argument that the Costs Respondent acted unreasonably by being belligerently adversarial, the Commission was referred to passages of Mr Mark Pato’s cross-examination. 15 It was contended that Mr Pato had departed from his written statement during his oral evidence because a more favourable answer could be given. The Costs Applicant argued that Mr Pato had not responded in good faith to the questions put to him under cross-examination. Therefore, it was submitted that, in relation to the threshold required under section 611 of the Act, the Costs Respondent did not conduct themselves in good faith at the hearing.16
[17] The Costs Applicant contended that the credibility of the Costs Respondent’s evidence was relevant to the costs application. This was in regard to the allegation made during the hearing (contrary to all of the written statements) that Mr Keogh had consented to the transfer. 17
Costs Respondent’s lack of engagement
[18] Thirdly, the Costs Applicant submitted that there was a lack of engagement by the Costs Respondent with the nub of the dispute, the hearing and the procedures. 18 The first example given was when Mr Pato had conceded that he was unaware of the Code and that he had not read it.19 This was said to have been a startling admission given that was central to the hearing.20 Not engaging with the relevant legislative framework was said to have the potential to delay or lengthen the proceeding.21
[19] Secondly, it was stated that the Costs Respondent did not appear to know what was in Mr Keogh’s application and that Mr Keogh was seeking reinstatement. The Costs Applicant contended that, acting reasonably, would have been the Costs Respondent assessing the application on its merits at the time and not having to be alerted to the remedy being sought by Mr Keogh, at the hearing which was held at a time much later. 22
[20] It was conceded that the Costs Respondent’s initial response may have been arguable. However, the Costs Applicant stated that, during the hearing and after certain disclosures were made plus the Calderbank offer and the way the hearing was run, at some point, the Costs Respondent has gone beyond what a reasonable Costs Respondent could argue, to a pedantic, belligerent and hyper adversarial approach. 23 The Costs Applicant submitted that it would be appropriate for the Commission to take into account that the Costs Respondent had gone from a robust, reasonable response to a “hyper – adversarial denial of reality”.24 One of the symptoms of the latter approach was said to have been the apprehended bias allegation without any substantiation.25
[21] Therefore, it was argued that the jurisdictional objection was without reasonable cause and that it should have been reasonably apparent to the Costs Respondent that they had no reasonable prospect of success during the running of the case. 26 The Costs Applicant contended that, once it was determined that the jurisdictional objection failed, the Costs Respondent should have conceded on the merits of the application.27
[22] The Costs Applicant submitted that the Costs Respondent’s maintenance of an incredible position (which was at odds with the written statements) right up until the end of the hearing, met the requirements of section 611(2(b). 28 It was stated that the Commission could be satisfied that it should have been reasonably apparent to the Costs Respondent that the dogged maintenance of positions until the end had no reasonable prospect of success with respect to either the jurisdictional objection or the substantive application.29 The clearest example of this was said to have been Mr Pato’s evidence that Mr Keogh had agreed to the transfer. It was argued that this was inconsistent with Mr Pato’s written statement which had not included that Mr Keogh had consented to the transfer. It was contended that Mr Pato had understood that, in order to succeed in relation to the merits, it would be better for his case if he said that Mr Keogh had consented to the transfer.30
[23] Finally, it was indicated that no issue was taken with the points of law and authority set out in the Costs Respondent’s submissions. Rather, the dispute lay in how the facts turned on the authorities. 31
French Par-Bake
[24] The company stated that, although the Costs application appeared to only be advanced on the basis of “without reasonable cause”, under section 611(2)(a) of the Act, section 611(2)(b) would also be addressed. 32
[25] It was submitted that the company’s jurisdictional objection was not made without reasonable cause. This was on the basis that:
• The transfer to other work was reasonable as it was a transfer from one classification to another classification under the same modern award. 33
• The Cost Applicant’s own evidence suggested that the terms of the verbal agreement with the company changed a number of times between 2012 and 2016. 34 The company had clearly complied with the consultation requirements of the modern award.35
• The company had relied on the decision in Campbell v Mayjay Hotels Pty Limited T/A Maroubra Junction Hotel (Mayjay Hotels) 36 in support of its jurisdictional objection as it was directly relevant.37
• The Costs Applicant did not rely on any applicable authorities at the jurisdictional objection hearing. 38
• The Costs Applicant elected to retain Counsel in the jurisdictional objection hearing due to the complexity of the company’s legal arguments. 39
[26] Further, as the evidence was first required to be heard before the Commission could form a view, it was argued that it could therefore not be concluded that, because the Costs Respondent’s arguments were not successful, that the jurisdictional objection was made without reasonable cause or that it had no reasonable prospect of success. 40
[27] The Commission was referred to the decision in Galea v Billabong Custom Caravans Pty Ltd T/A Billabong Custom Caravans 41, in support of this contention.42
[28] With respect to the Smith v Moore Paragon Australia Ltd 43 decision, the company contended that, the Commission relied on paragraph [32] of that decision in awarding compensation to the Applicant.44 Further, it was submitted that it was reasonable for the Costs Respondent to argue that it was permissible for the Costs Applicant to be unilaterally transferred to a different position due to a restructure.45
[29] French Par-Bake submitted that, in light of the absence of an authority supporting paragraphs [45] and [46] of the 26 May 2017 decision 46; the compliance of the Costs Respondent with a modern award and the Mayjay Hotels decision, it could not be said that the Costs Respondent’s arguments were without reasonable cause or having no reasonable prospect of success.47
[30] With respect to the Small Business Fair Dismissal Code, it was submitted that the Costs Respondent’s response to Mr Keogh’s unfair dismissal application solely related to the Costs Respondent’s jurisdictional objection and did not refer to or address the Small Business Fair Dismissal Code. 48 In addition, it was stated that the Costs application did not address the issue of the Costs Respondent’s jurisdictional objection and whether that response was made without reasonable cause and/or had no reasonable prospect of success.49 Therefore, if the Costs Applicant cannot demonstrate that the Costs Respondent’s jurisdictional objection was without reasonable cause and/or had no reasonable prospect of success, then the Costs application must be dismissed.50
[31] In terms of the Cost Applicant’s Calderbank offer, French Par-Bake contended that, based on the contents of the letter dated 23 December 2016, the Calderbank offer was irrelevant. This was because the letter referred to “a result more favourable than the offer set out herein”. It was stated that the Commission’s award of compensation was not more favourable than the Calderbank offer. 51 Mr Christodoulou highlighted that the Calderbank offer made an offer of settlement for $21,000 which was made up of compensation for unfair dismissal plus other factors.52 The Costs Respondent argued that the Costs Applicant seem to be ignoring the fact that the offer was $21,000. It was stated that, even if the Costs Respondent had made an offer of $5 or $15,000 it would still have been less than the offer.53
[32] Further, with respect to the other components that made up the Calderbank offer, the Costs Respondent indicated that the Costs Applicant had not yet commenced formal proceedings to recover those amounts. 54 The Calderbank offer was also said to be irrelevant because it was for $21,000 and the Costs Applicant has been able to recover some of that in terms of the compensation order (which was lower than the amount requested).55
[33] In regard to the Costs Applicant’s arguments about the Costs Respondent’s adversarial approach, it was stated that the parties knew of the Commission’s decision on 26 May 2017 and not on the day of the hearing. It was recounted that the Commission reserved its decision so, therefore, no one in the room was aware of what the decision would be, and the reasons for the decision, until sometime later. 56
[34] With respect to the Costs Applicant’s submissions regarding inconsistent evidence from Mr Pato, it was stated that there was a letter from Mr Keogh to the company suggesting that he would be returning to work. Mr Pato was said to have indicated that he believed that this was an agreement to transfer. Therefore, it could not be said that Mr Pato’s evidence had deviated from his statement. 57
[35] The Costs Respondent contended that the Costs Applicant’s arguments in support of the costs application needed to fit within the requirements of section 611(1). It was stated that, if the Costs Applicant was unable to do that, the application must fail. 58
[36] In relation to the meaning of “without reasonable cause” (section 611(2)(a)), the company referred the Commission to the authorities in Kanan v Australian Postal and Telecommunications Union 59 and in Church v Eastern Health t/as Eastern Health Great Health and Wellbeing.60
Considerations and conclusions
[37] The starting point is that each party bears its own costs in proceedings before the Commission. Section 611 of the Act then goes on to provide that the Commission may order exceptions to that general rule if either s.611(2)(a) or (b) is satisfied. However, even if one of those subsections is satisfied, the Commission is not obliged to order costs. It is a discretionary decision. The power to award costs pursuant to s.611(2) is to be exercised with caution and only in a clear case. 61
Was the application made without reasonable cause? (section 611(2)(a))
[38] In the decision in Keep v Performance Automobiles Pty Ltd 62 (Keep), a Full Bench of the Commission summarised the principles relevant to when an application is made without reasonable cause:
“The proper construction of s.611(2)(a) was recently considered by a Full Bench in Church v Eastern Health t/as Easter Health Great Health and Wellbeing (Church). Church is authority for the following propositions:
(i) The power to order costs pursuant to s.611(2) should be exercised with caution and only in a clear case.
(ii) A party cannot be said to have made an application ‘without reasonable cause’ within the meaning of s.611(2)(a), simply because his or her argument proves unsuccessful.
(iii) One way of testing whether a proceeding is instituted ‘without reasonable cause’ is to ask whether upon the facts known to the applicant at the time of instituting the proceeding, there was no substantial prospect of success.
(iv) The test imposed by the expression ‘without reasonable cause’ is similar to that adopted for summary judgment, that is, ‘so obviously untenable that it cannot possibly succeed’, ‘manifestly groundless’ or ‘discloses a case which the Court is satisfied cannot succeed.” 63 [Endnotes omitted]
[39] It was contended by the Costs Applicant that the Costs Respondent made its jurisdictional objection without reasonable cause. This was on the basis that, although it may have been arguable initially, the hyper adversarial approach taken by the Costs Respondent resulted in the Costs Respondent acting unreasonably in the face of reasonableness from the Costs Applicant. This was said to include the evidence of Mr Pato which was inconsistent with his written statement, particularly in relation to whether or not Mr Keogh had agreed to the transfer. It was also said to include Mr Pato’s ignorance of the Code and whether the company had complied with it.
[40] On the other hand, French Par-Bake argued that, from its perspective, transferring the Costs Applicant was reasonable because it was from one classification to another under the same award. Secondly, it was stated that it had been necessary for the Commission to hear the evidence before the Commission could form a view.
[41] As set out in Church in paragraph [38] above, the test is not whether the ‘argument proves unsuccessful’. The company was not successful in relation to its jurisdictional objection and the Commission also found against the company with respect to the dismissal itself. The case was robustly prosecuted by the Costs Respondent and the views expressed were obviously firmly held ones. However, the case put was arguable and the Commission was required to make a number of findings of fact in relation to the jurisdictional objection before being able to determine both the jurisdictional objection and the substantive application.
[42] Further, in accordance with the propositions set out in Church, it is not possible to find that the Costs Respondent’s jurisdictional objection was ‘so obviously untenable that it cannot possibly succeed’. This is because, following receipt of the Costs Applicant’s submissions and witness statement, it would have been apparent to the Costs Respondent that the parties held conflicting views about the one set of events. The Commission would therefore be required to make findings of fact about what had happened in order to determine the Costs Respondent’s jurisdictional objection.
[43] Therefore, I am not satisfied that the application was brought without reasonable cause.
Should it have been reasonably apparent to the Applicant that the application had no reasonable prospect of success? (section 611(2)(b))
[44] The Full Bench authority in relation to s.611(2)(b) of the Act is the decision in Baker v Salva Resources Pty Ltd 64 (Baker). In Baker, the Full Bench stated:
“The concepts within s.611(2)(b) “should have been reasonably apparent” and “had no reasonable prospect of success” have been well traversed:
• “should have been reasonably apparent” must be objectively determined. It imports an objective test, directed to a belief formed on an objective basis, rather than a subjective test; and
• a conclusion that an application “had no reasonable prospect of success” should only be reached with extreme caution in circumstances where the application is manifestly untenable or groundless or so lacking in merit or substance to be not reasonably arguable.” 65[Endnotes omitted]
[45] It was the Costs Applicant’s contention that it should have been reasonably apparent to the Costs Respondent that holding its position to the end meant that the jurisdictional objection and the substantive application (defence of) had no reasonable prospect of success. This was on the basis that, once it was determined that the jurisdictional objection had failed, it should have been reasonably apparent to the Costs Respondent that its defence of the substantive application would also fail.
[46] Further, the Costs Applicant contended that the Calderbank offer had set out the issues in dispute clearly and that, when the decision was issued by the Commission, the outcomes closely reflected the contents of the Calderbank offer.
[47] For its part, French Par-Bake refuted the contention that Mr Pato’s evidence had been inconsistent with his written statement in relation to the transfer issue. In addition, the Costs Respondent stated that the Calderbank offer was irrelevant as the offer was for more than was awarded. In addition, it was argued that there had been no opportunity for the Costs Respondent, had it wished, to concede in relation to the merits of the application. This was because the Commission decided both issues in one decision which was handed down some time after the hearing.
[48] The decision in Baker provides that the concept ‘should have been reasonably apparent’ is to be determined on the basis of ‘a belief formed on an objective basis, rather than a subjective test’. I am not satisfied that, objectively, it should have been reasonably apparent to French Par-Bake that the jurisdictional objection had no reasonable prospect of success. As, objectively, there were disputed facts, even though the company believed that their jurisdictional objection would succeed, it cannot follow that ‘it should have been reasonably apparent’ that the jurisdictional objection had no prospect of success.
[49] Baker also provides guidance in relation to ‘had no reasonable prospect of success’. On the material before me, I am unable to find that the Costs Respondent’s jurisdictional objection and defence of Mr Keogh’s substantive application was ‘manifestly untenable or groundless or so lacking in merit or substance to be not reasonably arguable’. Evidence was heard at the same time in relation to both the company’s jurisdictional objection and Mr Keogh’s UD application. The Commission reserved its decision with respect to both matters.
[50] As the Costs Respondent (and the Costs Applicant) were made aware at the same time, of the Commission’s decision in regard to the jurisdictional objection and in regard to the substantive application, there was no opportunity for the Costs Respondent to concede on the merits, having been unsuccessful in relation to the jurisdictional objection. This was because the Commission’s decision in relation to both matters was advised to the parties in the same decision. Therefore, it is not possible to find that French Par-Bake’s jurisdictional objection meets the criteria for no reasonable prospect of success as set out in Baker.
[51] Therefore, I am not satisfied that it should have been reasonably apparent to French Par-Bake that the jurisdictional objection had no reasonable prospect of success.
Conclusion
[52] Therefore, I am not satisfied that the jurisdictional objection was made without reasonable cause (s.611(2)(a)). I am also not satisfied that it should have been reasonably apparent to French Par-Bake that the jurisdictional objection had no reasonable prospect of success (s.611(2)(b)).
[53] Accordingly, I have no jurisdiction to order costs and the application for costs is dismissed. An order 66 to this effect will be issued separately.
Appearances:
M White of Counsel for the Costs Applicant
G Christodoulou of Fair Work Centre for the Costs Respondent
Hearing details:
2018.
Melbourne and Sydney (via video):
September 7.
Printed by authority of the Commonwealth Government Printer
<PR703365>
1 [2017] FWC 2865
2 [2017] FWC 4393
3 Exhibit CA1 at paragraphs 13 – 15
4 Ibid at paragraphs 14 – 16
5 Ibid at paragraph 17
6 Transcript PN 11
7 Ibid PN 12 – 13
8 Ibid PN 14 – 15 and 18
9 Ibid PN 18
10 Ibid PN 19 – 20
11 Ibid PN 21 – 22
12 Ibid PN 25 – 27
13 Ibid PN 28 – 31
14 Ibid PN 41 – 43
15 Ibid PN 99 – 1040
16 Ibid PN 45 – 47
17 Ibid PN 49 – 52
18 Ibid PN 58 and 67
19 Ibid PN 23 and 58
20 Ibid PN 59
21 Ibid PN 59 – 61
22 Ibid PN 62 – 66
23 Ibid PN 82-83
24 Ibid PN 84
25 Ibid PN 85
26 Ibid PN 86
27 Ibid PN 87 – 88
28 Ibid PN 99 and 102 and 105
29 Ibid PN 99 – 100
30 Ibid PN 103
31 Ibid PN 68 and 93 – 96
32 Exhibit CR1 at paragraph 7
33 Ibid at paragraph 13
34 Ibid
35 Ibid
36 [2012] FWA 163
37 Exhibit CR1 at paragraph 13
38 Ibid
39 Ibid at paragraph 16
40 Ibid at paragraph 21
41 [2017] FWC 2934
42 Exhibit CR1 at paragraph 19
43 [2004] AIRC 57
44 Exhibit CR1 at paragraphs 22 – 23
45 Ibid at paragraph 24
46 [2017] FWC 2865
47 Exhibit CR1 at paragraphs 24 – 25
48 Ibid at paragraphs 26 and 28
49 Ibid at paragraph 28
50 Ibid at paragraph 29
51 Ibid at paragraphs 30 – 33
52 Transcript PN 113
53 Ibid PN 114
54 Ibid PN 115
55 Ibid
56 Ibid PN 117
57 Ibid PN 119 – 120
58 Ibid PN 122
59 (1992) 43 IR 257
60 [2014] FWCFB 810
61 Ibid at [26] – [27]
62 [2015] FWCFB 1956
63 Ibid at [17]
64 [2011] FWAFB 4014
65 Ibid at [10]
66 PR703366
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